With the Bank of Canada holding interest rates at 0.25%, some are saying that Canada’s housing market is overheating. Housing starts are up 21% over 2008 and building permits are up 18% (which are forward-projections).
At the very least, it is a sign of the strength of the Canadian housing market. But it doesn’t speak to the strength of the commercial real estate market in Canada, which is arguably just as strong right now. Simply put, Canada’s real estate market is not at all the same as the U.S. real estate market. There are sub-prime mortgages in Canada, too, but guess what? Looks like they’re still making good on their mortgage payments.
Here are your top choices for broad-based investing in Canadian real estate. You can invest in the iShares Canadian REIT ETF (XRE), which only exposes you to the REITs, or you can cherry-pick from the following lists of TSX Composite-listed real estate stocks, which also includes (TSX: BPO) and (TSX: FSV).
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Top 12 Canadian Real Estate Stocks
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Brookfield Properties Corporation (TSX: BPO) – Owned by Brookfield Asset Management, Brookfield Properties is where you invest if you want to focus exclusively on urban, commercial real-estate. Market Cap: $6.1 B. Yield: 4.8%
RioCan Real Estate Investment Trust (TSX: REI.UN) – One of Canada’s largest and most well-known commercial REITs by far. Tenants include Loblaw, Chapters, Shoppers Drug Mart, Walmart. Market Cap: $4.3 B. Yield: 7.4%
Boardwalk Real Estate Investment Trust (TSX: BEI.UN) – Boardwalk REIT is focused on residential apartments throughout Canada – particularly Western Canada, Ontario and Quebec. Note that they suspended their DRIP plan back in February 2008. Market Cap: $2.0 B. Yield: 4.8%
H&R Real Estate Investment Trust (TSX: HR.UN) - Focuses on long-term leases with frequent rental increases on 34 office, 120 industrial and 117 retail assets. Tenants include Bell, Telus, Royal Bank of Canada, Sobey’s, EnCana, Loblaw and Canadian Tire. Market Cap: $2.0 B. Yield: 5.3%
Canadian Real Estate Investment Trust (TSX: REF.UN) – Also known as “CREIT,” this REIT focuses on about 160 industrial, retail and office properties throughout Canada. Average yearly return over past 15 years is 14.5%. Market Cap: $1.7 B. Yield: 5.3%
Calloway Real Estate Investment Trust (TSX: CWT.UN) – Alberta-based, Calloway’s portfolio consists in 115 large retail properties throughout Canada with tenants such as Staples, Value Village, Walmart, Bank of Nova Scotia, the Brick, Dollarama and Swiss Chalet. Market Cap: $1.6 B. Yield: 8.1%
Cominar Real Estate Investment Trust (TSX: CUF.UN) – The largest commercial property owner and manager in Quebec, Cominar owns about 140 retail, office and industrial properties. Market Cap: $1.0 B. Yield: 7.7%
Primaris Retail Real Estate Investment Trust (TSX: PMZ.UN) – Owns and operates 26 income-producing retail properties in urban centres and 20 shopping malls in smaller cities across Canada. Market Cap: $1.0 B. Yield: 7.6%
Canadian Apartment Properties REIT (TSX: CAR.UN) – Owns multi-family residential and luxury land-lease properties. Operates over 27,000 apartments and townhomes across Canada. Market Cap: $887.4 m. Yield: 8.3%
Chartwell Seniors Housing REIT (TSX: CSH.UN) – Specializes in independent and assisted-living seniors retirement homes and nursing homes. Owns and operates over 240 locations across Canada and the U.S. Market Cap: $628.0 m. Yield: 8.5%
FirstService Corporation (TSX: FSV) – Global real estate property management and property services. 18,000 employees worldwide. Market Cap: $564.6 m. No dividend.
Extendicare Real Estate (TSX: EXE.UN) - Founded in 1968, became a REIT in 2006. Provides long-term seniors healthcare at over 264 facilities. Market Cap: $547.3 m. Yield: 11.2%
The above list only represents real estate stocks listed on the S&P/TSX Composite Index. There are other real estate trusts on the TSX, too, but they may not be as liquid or highly traded as these ones, which compose a number of Canadian indexes.
In a future post I’ll look at some Canadian real estate stocks (and REITs) you may not have heard of.
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